The new headquarters of the Perot Family Office in Dallas, Texas provides space for 250 staff dedicated to management of the family’s wealth. Image source Mithun, Inc
Family offices are not just for billionaires anymore. As investments and fund management impact the portfolios of people in nearly all economic classes, it is important that real estate professionals in the luxury market take note of the ways individuals and families manage their assets. For the enterprising, the family office is the next frontier.
What is a family office?
As The Wall Street Journal notes, family offices began in the 19th century to manage the fortunes of the tycoons of the day (think Rockefeller) and offer similar services as private banks and wealth managers but are devoted to a single family. Nowadays, the affluent millionaires, of which there are more than 100,000 families in the U.S. alone, are teaming together to share the expenses of a devoted staff in a multi-family office.
The concept of the family office is expanding rapidly. UBS, one of the largest wealth management firms in the world, recently announced a new division dedicated to guiding families in creating offices of their own. This announcement comes at a time when high net worth families are becoming increasingly worried about the future of their wealth. The UBS Family Office Compass expects that 70 percent of family offices will experience generational transition within the next 15 years.
John Matthews with UBS Wealth Management Americas notes that, “It is crucial for families wanting to create lasting financial success to identify their driving purpose and to formulate an overall family strategy. Clarity of purpose for the family, and in turn, the family office leads to improved performance of the family office over time.”
How can this impact real estate professionals?
Family offices are seeking the expertise of advisers to guide their investments in areas with the greatest return such as natural resources, domestic equities, and real estate.
“The one place family offices think they can still generate double-digit returns is in operating businesses and real estate,” says Kristi Kuechler, president of the Family Office Exchange private investor center.
As family offices shift their wealth in anticipation of generational changes and increase their direct investments into real estate, professionals in the industry must use their training and resources to provide hyper-local data in a high-touch way that the staff of these offices expect from any adviser. Savvy professionals in the luxury real estate market can advise a family office on how best to develop a portfolio of investments in markets around the country with the most potential for return.
The Institute for Luxury Home Marketing produces the Luxury Market Report and more than 30 local market reports for its members to use as a tool to develop an effective real estate investment strategy for their clients.
To learn more, visit the articles used for reference this post:
- Family Office Compass, UBS
- Financial Advice, Served Rare by Julie Steinberg and Kelly Greene, The Wall Street Journal
- Perots’ new Dallas campus… by Steve Brown, The Dallas Morning News
- Rich Families Go Solo on Deals… by Margaret Collins and Simone Foxman, Bloomberg News
- UBS Urges Ultra High Net Worth Families… from Business Wire